While, we are obviously bullish about the future of the global cannabis industry, potential investors and entrepreneurs shouldn't just jump into any venture blindly. Always do your research, and, of course, if something sounds too good to be true, it usually is. Getting rich quick off of marijuana stocks, especially while marijuana is illegal, may not pan out as one might wish. For a long time, marijuana stocks didn't exist. A few years ago, as the medical marijuana industry grew, more and more stocks started popping up. After marijuana was legalized in Washington and Colorado, interest for marijuana stocks grew, and after recreational marijuana sales started at the beginning of the year in Colorado, interest exploded.
This increased interest was great for marijuana companies that offer stock. The price for marijuana stocks skyrocketed at the beginning of this year. Unfortunately, a lot of these companies rely on hype to sell their stock, because they either have no end product or a poor end product. It was a perfect storm for these kinds of companies, who made a lot of money. At the same time, a lot of investors saw their investments rise for a bit, but have since seen those same stocks come back to earth. That's bad news for marijuana stock investors who didn't do their homework.
From Investor Place:
The con artists behind marijuana stock scams may try to entice investors with optimistic and potentially false and misleading information that in turn creates unwarranted demand for shares of small, thinly traded companies that often have little or no history of financial success.
If you are considering buying marijuana stocks, be leery of what's currently out there. Err on the side of caution. Doing as much research as possible, and only after you have turned over every rock in the company's past, present, and future should you make your purchase. Ensure that the end product or service that the company has is real, and that it's something people are actually buying. If the company relies more on hype and what the industry 'could become', rather than actual sales numbers and profits rolling in, the stock is probably to good to be true.